FINANCIAL SECTION

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egulated in “Accounting Standards for Financial Instruments,” those covered by firm forward exchange contracts can be translated at such contracts rates. At year-end, monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance sheet date, except for those, as described above, translated at related contract rates. Gains or losses resulting from the translation of foreign currencies, including gains and losses on settlement, are credited or charged to income as incurred. The financial statements of the consolidated foreign subsidiaries are translated into the reporting currency of yen as follows: all assets and liabilities are translated at the rates of exchange in effect at the balance sheet date; stockholders’ equity accounts are translated at historical rates; income and expenses are translated at an average of exchange rates in effect during the year; and a comprehensive adjustment resulting from translation of assets, liabilities and stockholders’ equity is included in minority interests and, as “Foreign currency translation adjustments,” a separate component of stockholders’ equity. Previously, foreign currency transactions were translated into yen on the basis of the rates in effect at the transaction date, except for those covered by firm forward exchange contracts which were translated at such contract rates. At year-end, monetary current assets and current liabilities denominated in foreign currencies were translated into yen at the rates of exchange in effect at the balance sheet date, and other monetary assets and liabilities denominated in foreign currencies were translated into yen at historical rates. However, material unrealized translation losses on other monetary assets and liabilities had to be calculated using the rates of exchange in effect at the balance sheet date. On translation of the financial statements of the consolidated foreign subsidiaries, a comprehensive adjustment resulting from translation of assets, liabilities and stockholders’ equity was presented as “Foreign currency translation adjustments” in the consolidated balance sheets as an asset or liability. As a result of the application of this standard, there was little effect on net income for the year ended 31st March, 2001. (j) Appropriation of Retained Earnings Cash dividends, transfers to legal reserve, and directors’ bonuses are recorded in the financial year during which such appropriations of retained earnings are made. (k) Per Share Data Primary net income per share is based on the weighted-average number of shares of common stock outstanding during the respective years. On a diluted basis, both net income and shares outstanding are adjusted assuming conversion of the convertible bonds. Cash dividends per share shown in the accompanying consolidated statements of income represent dividends declared for those years. The cash dividends shown in respect of the year ended 31st March, 2001 include a dividend of ¥18.0 ($0.15) per share approved by stockholders at a meeting held on 22nd June, 2000. (l) Financial Instruments Effective 1st April 2000, the Company adopted “Accounting Standards for Financial Instruments” issued by the Business Accounting Deliberation Council. Under this standard, installment accounts receivable shall be recorded at fair value less related interest income. As a result of the application of this standard, interest income in the amount of ¥21,316 million ($171,903 thousand) at 31st March 2001, previously included in “Deferred income,” is offset directly against installment accounts receivables, and advanced guarantee fee in the amount of ¥2,107 million ($16,992 thousand) at 31st March 2001, previously included in “Deferred income,” is reclassified to “Other current liabilities.” (m) Derivative Financial Instruments Effective 1st April 2000, the Company adopted “Accounting Standards for Financial Instruments” issued by the Business Accounting Deliberation Council. Under this standard, in principle, net asset or liability arising from derivative financial transaction is measured at fair value, with unrealized gain or loss included in earnings. Hedging transaction, which meets the criteria of hedge accounting as regulated in “Accounting Standards for Financial Instruments,” is accounted for using deferral hedge accounting, which requires the unrealized gain or loss to be deferred as a liability or asset until gain or loss relating to the hedge object is recognized. Previously, foreign currency swap transactions were accounted for as foreign currency transactions covered by such swap transactions were translated at such swap rates and, interest rate swap transactions were accounted for as if interest rates under the interest rate swap transactions were originally applied to underlying borrowings and debentures. Net assets or liabilities arising from derivative financial transactions are measured at fair value, except for interest rate option contracts, which are accounted for using deferral hedge accounting. In addition, certain foreign currency swap transactions and certain interest rate swap transactions are accounted for using the allocation method and the special method, respectively, which are regulated in the standard. The allocation method requires recognized foreign currency receivables or payables covered by firm foreign currency swap transactions to be translated at such swap rates. Under the special method, interest rate swap transactions are accounted for as if the interest rates under those transactions were originally applied to underlying borrowings and debentures. As a result of the application of this standard, there was little effect on net income for the year ended 31st March, 2001. (n) Reclassifications In 2001, the Company changed the format of the consolidated statements of income from multi-step to single-step for the purpose of more appropriate presentation of its operational activities. The consolidated statements of income and related notes for the year ended 31st March, 2000 have been reclassified in conformity with the 2001 presentation. In addition, certain reclassifications have been made in prior year’s consolidated financial statements to conform to classifications used in the current year’s financial statements. 30 Hitachi Capital Corporation Annual Report 2001
Effective from 1st April 2000, in the year of 2001, cash flow statement was presented according to Accounting standard in Japan. “Interest paid” is classified in “Cash flows from financing activities”, and the Company’s consolidated cash flow statement was reclassified and specified cash flows affected by asset backed securitization in the category of “Cash flows from operating activities”. (4) Assets Deposited At 31st March, 2001 and 2000, marketable securities of ¥38 million ($306 thousand) and ¥23 million ($185 thousand), respectively, were deposited as performance guarantees. (5) Short-term Investments and Investments in Securities Effective 1st April, 2000, the Company adopted “Accounting included in earnings during the year ended 31st March, 2001. Standards for Financial Instruments,” as discussed in note 3 (e). The following is a summary of the amortized cost basis, gross As of 31st March, 2001, the Company and certain subsidiaries unrealized holding gains or losses and aggregate fair value of heldto-maturity securities and other securities by major security type have trading securities of ¥3,782 million ($30,500 thousand) as “Short-term investments” in the consolidated balance sheet, with net as of 31st March, 2001. unrealized holding loss of ¥114 million ($919 thousand) that has been Japanese yen (millions) U.S.dollars (thousands) Amortized Gross Aggregate Amortized Gross Aggregate cost gain fair cost gain fair basis (loss) value basis (loss) value 2001 2001 Held-to-maturity securities with gross unrealized holding gains: Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . ¥ 38 ¥ 3 ¥ 41 $ 306 $ 24 $331 ¥ 38 ¥ 3 ¥ 41 $ 306 $ 24 $331 Other securities with gross unrealized holding gains: Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 632 ¥759 ¥1,391 $ 5,097 $6,121 $11,218 Bonds and debentures . . . . . . . . . . . . . . . . . . . . . – – – – – – 632 759 1,391 5,097 6,121 11,218 Other securities with gross unrealized holding losses: Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . 127 (11) 116 1,024 (89) 935 Bonds and debentures . . . . . . . . . . . . . . . . . . . . . 1,000 (9) 991 8,065 (73) 7,992 1,127 (20) 1,107 9,089 (162) 8,927 ¥1,759 ¥739 ¥2,498 $14,186 $5,959 $20,145 It is not practicable to estimate the fair value of investments in non-marketable securities because of the lack of a market price and difficulty in estimating fair value without incurring excessive cost. The carrying amount of these investments classified as heldto-maturity securities and other securities at 31st March, 2001 totaled ¥760 million ($6,129 thousand) and ¥1,798 million ($14,500 thousand), respectively. Information about the contractual maturities of held-to-maturity securities and other securities with contractual maturities at 31st March, 2001 is as follows: Japanese yen (millions) U S dollars (thousands) Within After one year After Within After one year After one year through five years ten years one year through five years ten years 2001 2001 Debt securities: National bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ – ¥ 38 ¥ – $ – $ 306 $ – Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . – 560 1,405 – 4,516 11,331 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 760 – – 6,129 – – ¥760 ¥598 ¥1,405 $6,129 $4,822 $11,331 Annual Report 2001 Hitachi Capital Corporation 31
Page 1 and 2: FINANCIAL SECTION FINANCIAL REVIEW
Page 3 and 4: NET INCOME (billion yen) 14.7 NET I
Page 5 and 6: provides a generous degree of prote
Page 7 and 8: NET CASH FLOWS FROM OPERATING ACTIV
Page 9 and 10: CONSOLIDATED STATEMENTS OF INCOME H
Page 11 and 12: Japanese yen U.S. dollars (millions
Page 13 and 14: CONSOLIDATED STATEMENTS OF CASH FLO
Page 15: ing profits on short-term differenc
Page 19 and 20: (7) Short-term Bank Loans and Long-
Page 21 and 22: The Company and its domestic subsid
Page 23 and 24: (11) Stockholders’ Equity At 31st
Page 25 and 26: U S dollars (thousands) Elimination
Page 27 and 28: (b) Lessor (i) Acquisition costs, a
Page 29: INDEPENDENT AUDITORS’ REPORT To t

FINANCIAL SECTION

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